Let’s say, there is a star performer in your company operating at a high efficiency level. But you find out that he has been somewhat dishonest and is making a few bucks on the side. Would you fire him immediately or continue working with him, treating his dishonesty as a "small cost" of doing business? Or would you replace with him someone very honest but who may not be as efficient?

The real question is not what I would do: the question is, what would you do? The truth is, there are many choices; each has its own consequences, both in the short and the long term. As the owner of the business or its chief executive, you must have clarity on one thing: what does the term ‘honesty’ mean to you? What price would you pay for your own belief? Remember, there is no judgment I am expressing here. There are Indian organizations that make no distinction between honesty and high performance; yet there are those who, for whatever reason, have flexible interpretations.

Let me share a real example. A couple of years back, I was interviewing a candidate for a CXO level position. He came from a very well-known Indian IT company. I asked him how the issue of integrity gets handled in his organization where he acts as a custodian of governance because of the nature of his role.

“It all depends on who is involved”, he said. I asked him to expand on that statement because I found it problematic. But that is me. So, he said, it all depends. “Let us say there is an infraction, maybe fudging of expenses, bribery, sexual harassment, whatever. And the person involved is someone from the delivery organization, then of course there is zero tolerance. Zero. But if it is a sales guy, he would get a rap on his knuckles and be told to be careful in the future.”

This organization is large, successful by Indian standards, the founder supports many charities. But his peers have more reputational capital. Should he care? It depends on him really. Do note that for a comparable revenue base, his three peers have a lot more market cap than him. It basically means that reputation, built on a sustained view of governance, has its own return on investment. Even the retail investor has eyes and ears.

Now, going back to your question, I have a favourite problem that I pose to young leaders while explaining the idea of integrity. It goes like this: your company is negotiating a really big deal, whose fate depends on a crucial negotiation due on Monday. For your company, a huge lot depends on the outcome. It is Friday morning. You just realized that the sales person from your side, critical to the deal, the only one with access to and knowledge of the prospect, is in violation of the articulated (not assumed) principles of integrity of your organization. What would you do? Rap on the knuckles? Show the door? Hmmm.

There are companies that would say, why burn the house to roast a pig? There are others that would say, irrespective of who is involved and what the consequence to the business, we will ask the man to leave because the jungle has eyes and ears and at this moment, people in the company, unknown to you, are watching how flexible would the top management be? People learn what is, and what is not, the accepted organization behaviour, not through “company policy” but, company action. Only action creates social memory which is the best investment, should you value reputational capital.

But right this moment, it is the sales guy who has the key to the prospect’s door and based on what you decide, chances are 50:50. You could lose the deal because you sacked the guy.

On the other hand, to the prospective client, your action may validate the idea of honesty. There are clients who know very well that the real character of people shows up in moments of great difficulty. If you brace it, you may come across as the better governed choice. Internally, for the honest employee, it sends out validation; it may get the fence sitters in the company to get to the right side and tell the rest of them, how far you would go to protect the organization’s values.

That said, on Friday morning, it is your personal conflict, which only you can resolve. And it is this: choose the right or choose the convenient?

In your question to me, you have alluded to the idea of “cost of doing business”. Let us dwell on that for a moment.

Someone in your shoes may say, you know what, this is India. I do not want to be the only one dressed up in a nudist beach. My job is to do whatever it takes to further my business. In a scam ridden country, this is a prevalent mind-set, whether or not expressed in so many words. There is a certain bravery, usually machismo, associated with doing things that contravene the law or flout morality.

On the other hand, there are people who play it by the book, who do not worry about what is the so-called Indian reality and they build their own worldview. Because they do so, they end up attracting a certain kind of customer both from the private and the government sector. Yes, even the government sector. Because, in the government, not everyone is corrupt and all deals are not tainted. In all of this, there is another angle worth considering: the global market. If you want to do business with the world, reputation is the new currency. So, you make your choice.

Just as you do that, let me clear two myths. One, if you are honest, you needn’t be effective. Two, if you are honest, there is a special prize waiting for you.

If you choose the right over the convenient, there is a price you have to pay. Don’t assume there is a red carpet, a separate fast lane and special handling for those who are honest.

Building an organization of honest and competent individuals takes a great deal of perseverance; it can well be the longer road to success. Of course, everyone’s definition of success need not be the same.

Now the ultimate question: do you replace the effective but dishonest guy with an honest but ineffective individual? In truth, these are not the only two choices. It really depends on how much you are willing to stretch. You would be surprised how many honest and capable people are there all around. But there is a catch.

Do know that right this moment, they are quietly researching you on the world wide web on what decision you are taking on Friday morning.

If you have any questions mail us as askbagchi@foundingfuel.com

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Comments

Very well written piece... Every decision one takes has an associated 'cost'. This inevitable cost will definitely have different connotations varying from person to person or across organizations, sometimes shifting even for a single individual when observed at different times depending on the immediate priorities at hand. I feel that any cost paid is not high provided it doesn't take away the place of prominence from the product or service it is paid for or 'the higher principle' relevant to the situation. Having paid the cost/price, if one stays on course with the larger objective without rethinks or repents, the price was just right. Most such costs would turn out to be good investments and even the purported 'losses' are easily rehashed as a 'cost' towards some new insight/knowledge. Anyone facing such dilemma often might be a fence-sitter because for a team which has decided upon the 'reputation capital' route, such decisions come easy and with tremendous conviction. Thanks Mr. Bagchi for sharing your thoughts! Almost completely agree with Steve Dabbah.

Raghav Kheria on Nov 09, 2015 6:10 a.m. said

thank you for answering my question mr bagchi...I understand your views but the problem is that its not a level playing field...For example, I don't blame Lance Armstrong for taking drugs...the fact is that sportsman have a short career and if everyone around you is taking steroids and not getting caught, what do you do?...there is no other way to win the apart from taking steroids...it is easy for us people sitting on the fences to pass moral judgements, but as they say "never judge anyone unless you have walked a mile in their shoes"

Mark Dara on Nov 09, 2015 3:35 a.m. said

Richard Branson, who is perceived as one of the most inspiring business leaders of our times, in one of his blogs (and also apparently in his book "The Virgin Way") stated this - quote Management is about maintaining processes, disciplines and systems — something that doesn’t come naturally to yours truly. Where managers keep the rules, leaders have to be willing to break them, or at least find creative ways around them. As I wrote in my book, "The Virgin Way," leaders must have vision, creativity, and the ability to influence others to follow and support them into uncharted and often risky territory. unquote.

What exactly he means by "Where managers keep the rules, leaders have to be willing to break them, or at least find creative ways around them" is left to anybody's interpretation but this narrative is something I hear leaders/bosses/managers often say.

These days, it's very hard to tell who a good leader is and who a boss is because the lines are way too blurred. Bosses try to become leaders by trying to get "break the rules but in an acceptable and palatable way" - this is just absurdity at it's best!! And we're talking about breaking rules or , as Branson calls it, "being creative", which could potentially impact lives. So the question comes down to, what the meaning of leadership really is. I'm sorry to answer a question (the question central to this article) with another question, but really - what does it mean to be a good leader?

Another example is that Jeff Bezos. Is he a good leader or a good boss? Let's take Steve Jobs. Given what his colleagues say about his management style , is he a good leader or a good boss? The investors don't really care as long as their equity in the company does well. But what did people reporting to say ? Even bigger question is - what kind of leaders did he create in the company ? If Bezos is the role model at Amazon then what kind of leaders has he created in his company ?

Don't get me wrong, I am all for creativity, working hard and working smart but what happens when favorable results are the only things that matter? Well, I reckon that that's when many interpretations of "rules" and "creative ways" start to emerge - unfortunately though some lead to disasters like Enron and Lehman Brothers.

Dr. Dilip Vinnakota on Nov 06, 2015 5:10 p.m. said

Interestingly the 'high efficiency- low honesty' matrix and the interpretation of their intrinsic values in corporate sector are beyond the common man's comprehension.However many entrepreneurs in Indiaexcelled with the composition of 'high efficiency- very honest' formula and reached insurmountable heights.Eventually the phrase 'the so called scamm ridden country' perhaps does not work as the true reflection of Indian citizen's attitude and honesty.

Steven Dabbah on Nov 06, 2015 10:46 a.m. said

First of all, I find the term"very honest", rather disturbing. I do not think there is a ruler to measure a "degree of honesty". Or you are "honest" or you are not. Second, a so called "scamm ridden country", can never justify not being personally and corporatively honest. Third, why compare "a dishonest star performer" to someone "very honest but not eficient", as if there are no honest efficient people out there??? Companies are built on efficient team work and not on individual stars. Individual stars may have a very quick rising result but not sustainable on the long run. Whilst efficien team work builds sustainable results.Honesty is also about caring for the stakholders, especially treating all levels of employees with respect, dignity, fair pay, proper benefits and making them feel part of the business.Honesty is all about your daily acts.I believe there is no space for for being dishonest. Being honest will link you to similar mind sets and start a great influence on your surrounding.

Craig Nonya on Nov 06, 2015 10:20 a.m. said

Personally, I would choose integrity every time, hands down. But I have come to understand that some companies feel simply cannot afford to do so.

If an employee is somewhat lacking in integrity but is not breaking the law or stealing, the company might think they have to accept that good help is hard to find, and keep them.

I think that no one is perfect, and good help is hard to find. If you have a hardworking, trustworthy employee, don't discard them to take a risk on high hopes that the grass might be greener with someone new.

MANOJ TRIVEDI on Nov 06, 2015 5:46 a.m. said

Dear Mr Bagchi

Thanks for your article which is very much prevalent in Indian industry which I say with my 34 years of association with industry. Of course, I beg to differ on the very basic subject. Questioned integrity and high performance cannot go parallelly. A dishonest person will always be under the burden of obligation and cannot perform effectively to deliver what organization wants.Whereas, an honest person with no obligation can perform to deliver and achieve the goal. I say this with great confidence since I am the victim of being honest. Even though I have delivered value at all point of time and all activities that I have performed, there were group of people senior to me were always scared of my honesty. In order to save their vested interest, I was victimised although top management were very much aware of my work & integrity.None, absolutely none came to my rescue. This is not only my story, but is the story of most of the Indian industry. Basic reason of this is Indian business leaders are more interested in their profit which they don't want to share with shareholders. They are interested in such people who can specifically deliver them. Organizational value is their next priority.

In 1999, he co-founded Mindtree, one of India’s most admired software services companies. He now serves as the non-executive director of the Mindtree board of directors.

He started as the Chief Operating Officer at Mindtree after its inception. Soon Mindtree was hit by the global economic slowdown and then the events of 9/11. Many early-stage companies collapsed during this time and Bagchi moved to the US and helped the leadership team stay together through the difficult years.

During this time, he articulated a new positioning for Mindtree as the best mid-sized company from India, which later became a reality.

Between 1999 and 2007, as the COO, he was instrumental in articulating Mindtree’s mission, vision and values. He led leadership development, marketing and knowledge management initiatives that differentiated the company from the very beginning. Mindtree’s distinctive physical locations reflect his thought leadership. He is also the face of the company’s outreach beyond business. In 2007, he was part of the apex team that led Mindtree from an idea to IPO.

Post-IPO, Bagchi took on the role of Gardener at Mindtree. In this new role, he focused full-time on the Top-100 leaders at Mindtree to expand their leadership capacity beyond the founding team. In 2010, he was appointed vice chairman to the Board. On April 1, 2012, he assumed the office of Chairman.

Bagchi is a member of the Governing Council of the Software Technology Parks of India. He is a well-known writer, having penned a number of widely read books and columns for newspapers and magazines. In 2011, he has been acclaimed as India’s No.1 bestselling business author.